London & Southwestern Ontario
Debt Consolidation Mortgage in London, Ontario
Rolling high-interest debt into a mortgage secured by your home can cut a monthly payment dramatically. It can also turn a temporary problem into a 25-year one.
Both outcomes are common, and which one you get depends on the plan attached to it.
Nandan Bajani · Mortgage Agent Level 1 | Ontario · The Mortgage Firm Inc.
How it works
You refinance the mortgage for a larger amount — generally up to 80% of the appraised value — and the lawyer pays out the credit cards, lines of credit, car loans or other balances directly at closing.
Those payments disappear from your monthly budget and are replaced by a larger mortgage payment at a much lower rate.
When it genuinely helps
- Meaningful balances at credit card rates that are not going down
- Enough equity to consolidate within the 80% limit without private financing
- Stable income to carry the new payment comfortably
- A commitment to keep the paid-off accounts closed or at low balances
The real costs
The real costs
Add up the prepayment penalty if you break mid-term, appraisal, legal fees and any lender or broker fee on an alternative file.
Then compare total interest over the amortization, not just the monthly saving — a $30,000 balance stretched over 25 years can cost more in total even at a much lower rate, unless you direct the monthly savings back at the mortgage.
Risks and alternatives
Risks and alternatives
Unsecured debt becomes secured against your home, which raises the stakes if income is interrupted.
Before consolidating, it's worth pricing the alternatives: a balance transfer, a HELOC used as a disciplined repayment tool, an unsecured consolidation loan, or credit counselling where debt exceeds available equity. Consolidation is one option among several, not automatically the best one.
Related reading
Questions people ask
How much debt can I roll into my mortgage?
Up to the point where the new mortgage stays within roughly 80% of your home's appraised value with prime lenders, subject to qualifying.
Will consolidating hurt my credit score?
Paying balances to zero usually helps utilization, though closing accounts and adding a new mortgage inquiry have short-term effects.
Should I close the credit cards afterwards?
At minimum, stop carrying balances. Many people keep one card open for emergencies and close the rest to remove temptation.
Can I consolidate with bruised credit?
Often yes, through alternative lenders, though at a higher rate and with fees. The math needs to clearly beat the debt being paid out.
Should I consolidate with a refinance or a HELOC?
A refinance gives you one amortized payment that pays the debt off over time. A HELOC is more flexible but often interest-only, which makes it easy to carry the balance for years. If the goal is getting out of debt, a structured repayment usually works better.
How much will consolidating save me?
It depends on the rates on your current debts, the new mortgage rate, any penalty for breaking your mortgage, and the legal and appraisal costs. Monthly payments usually drop, but spreading debt over a long amortization can increase total interest unless you pay extra.
Can I consolidate a car loan or CRA debt into my mortgage?
Usually yes, as long as everything fits within about 80% of your home's value and you qualify. Lenders typically require CRA debts to be paid out as part of the refinance.
See whether consolidating actually saves you money
A short conversation is usually enough to know what's realistic. No obligation, no pressure.